Buyers Want to Move In Early

Should We Let the Buyers Move In Before Escrow Closes?

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Wed May 03, 2023 | 03:20pm

Q:  Marsha, in 10 days we are closing escrow on the sale of our house. The buyers have to be out of their house in four days. They’ve asked if we would consider allowing them to move in early. The buyers’ agent doesn’t see anything wrong with the idea. She has allowed early occupancy before and never had a problem. My agent, on the other hand, is adamantly against it. It’s been a really friendly and smooth escrow. I’m inclined to let them take possession early. What are your thoughts?

A:  My thought is no, no, and no! So the buyers’ agent never had a problem with letting buyers take early possession? That’s great. But the thing about problems is you don’t have them until you do. And then you have a problem. The buyers’ agent’s attitude is like saying “Why buy car insurance? I’ve never had an accident before.” Not allowing early occupancy before the close of escrow is your insurance against potential disaster. 

Buyers are likewise reluctant to allow sellers to remain in possession of their former home. It’s for the same reason sellers shouldn’t let buyers take early possession. Things go wrong. Once the property transfers to the new buyer, what is the status of the seller who remains in possession? What is the title of the buyer who moves in early and doesn’t own the property yet? Are they soon-to-be owners? Maybe. What if they decide they really don’t want the house? Are they still buyers, or are they now tenants or squatters? They’re definitely a nightmare. With their status uncertain, how do you remove them from your house, cancel escrow, and put your house back on the market?

Your buyers’ agent is probably right 99 percent of the time. However, the California Association of Realtors (CAR) is so concerned about that one percent of the time when things go awry that they developed the Buyer Early Occupancy Addendum (CAR form BEO). This form states the terms of the possession; any money involved; who pays utilities, maintenance, and insurance; and much more. The important paragraph to note is where CAR states in bold and all capital letters: “Brokers do not recommend early occupancy … consult legal counsel … if buyer and seller agree to early occupancy they are doing so against the advice of broker and at their own risk.”

Many dramas have occurred. Here is just one I recently heard about. The buyer took early possession and immediately started his remodeling project. He tore down the garage. No permits or building contractor involved. His loan fell through. The buyer moved out and the owner was left with a mess.

What happens if the lender runs credit right before closing and the buyers have gone on a furniture-buying spree for their new house? The additional debt they’ve taken on wrecks their debt-to-income ratio. Loan canceled. Or the title company discovers a new lien that hadn’t surfaced before. Liens can take weeks to clear. The buyers’ friend falls and gets injured. Who is responsible for the injury? Or… I hope you see that there are infinite variations on this early move-in scenario. There is no incentive or reason to allow early possession.

Marsha Gray has worked in Santa Barbara real estate for more than 25 years. She works at Allyn & Associates, where she helps her clients buy and sell homes and with lending services. To read more of Marsha’s Q&A articles, visit MarshaGraySBhomes.com. Contact Marsha at (805) 252-7093 or MarshaGraySB@gmail.com. DRE# 012102130; NMLS #1982164.

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